Options Trading News

November 20, 2012  Tue 3:16 AM CT

As shares of U.S. Bancorp continued to bounce yesterday, one long-term trade was betting on a floor beneath the stock.

A trader sold 5,000 January 2014 25 puts for the bid price of $1.33, according to optionMONSTER's systems. The volume was twice the open interest in the strike at the start of the day, so it was a new position.

USB rose 1.7 percent to $32.08, building on Friday's gains and erasing its losses of last week. The financial stock was at a four-year high just above $35 in early October, but Thursday's low of $30.96 was its lowest price since June.

The put selling is a bet that USB will hold above $25 through mid-January 2014. The trader faces the obligation to buy shares on a pullback, but at an effective price of $23.67. (See our Education section)
Share this article with your friends



The fastest money in the market
View full report »

Premium Services

Archived Webinar

Education & Strategy

The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

View more education articles »